In one of the largest class action law suits ever, Betsy Dukes and approximately 1.5 million current and former female Wal-mart employees brought suit for discrimination against women in Wal-Mart’s promotion and pay policies. The United States Supreme Court ruled against class certification in a decision that has significantly changed the legal landscape for large-scale federal class action lawsuits.

In Wal-Mart Stores v Dukes (June 20, 2011, No. 10-277), the Court held that, for a potential class action lawsuit to be certified by federal courts, the lead plaintiffs must produce “significant proof” that their claims share such strong commonality with those of the general class members that the determination of the validity of each claim can be resolved in one class-wide stroke.

The Court also made it clear that claims for individualized monetary relief such as back pay cannot be certified under the Federal Rule 23(b)(2) “injunctive-type” lawsuits; instead, suits involving any type of individualized monetary claims can now only be brought as a Rule 23(b)(3) “damages-type” lawsuit irrespective of whether the injunctive or monetary relief predominates.

What does this all mean?

It’s reassuring to employers. It assures employers nationwide that if they maintain clear and uniform anti-discrimination policies and, of course, enforce them consistently across the company, it will be an uphill battle for plaintiff employees to prove that the company’s managers nonetheless discriminated against employees on a class-wide basis.

It tells plaintiffs to segmentize statistical evidence. Plaintiffs suing multiple-location defendants in federal court will need to carefully synthesize statistical evidence into narrow segments. In Wal-Mart, statistics showed gender disparities in both pay and promotion at both regional and national levels, but not at a store-by-store level and was thus considered unpersuasive. Further, any anecdotal evidence should correspond in amount roughly to the size of the class and represent the geographical nature of the suit. Putative class counsel should think both quantity and quality in these types of lawsuits.

It tells plaintiffs to stay clear of soft science experts. Plaintiffs seeking to prove alleged discriminatory practices in a federal class action context should no longer rely on popular science experts and what will now likely be considered overly-vague testimony. In Wal-Mart, plaintiffs’ sociology expert stated that Wal-Mart’s “strong corporate culture makes it vulnerable to gender bias,” but he couldn’t determine whether “0.5% or 95% of the employment decisions at Wal-Mart” may have been impacted by discriminatory thinking and practices. Plaintiffs will want to use more traditional types of experts instead or in addition to soft science experts.

What does this federal decision mean in California? We have CCP §382, which authorizes class action suits “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court.” Also, common questions of law or fact must predominate over individual ones. Richmond v Dart Indus. (1981) 29 C3d 462, 470, 478. This means that

But the case does makes it clear that Eisen v Carlisle & Jacquelin (1974) 417 US 156, 177, which California courts have interpreted to bar them from looking at the merits of a case in ruling on class certifications, stands for no such proposition. 564 U.S. __, 10 n6. The “no looking into the merits” argument is thus dead.

Does Wal-Mart signal the end of large-scale class action lawsuits in federal courts? Perhaps. At least this much appears to be clear: Plaintiffs’ counsel must be careful to split up large, but not entirely uniform, claims into smaller ones to ensure the crucial commonality of claims.

Examples of splitting employment-related claims into smaller potential classes with a large degree of uniformity include:

Groups of employees who still work for the corporation and those who no longer do so;

Groups of employees from individual stores or branches;

Groups of employees within other relatively narrow geographical boundaries;

Groups of employees seeking relief against specific supervisors; or

Groups of employees seeking relief because of certain specific conduct across departments.

The most important thing to remember after Wal-Mart in getting a class certified is to not bite off more than one can chew. Less is more!

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